Yen Pinned Near ¥157.90 as Traders Wait on BoJ and a Possible December Hike

The US dollar was holding close to ¥157.90 against the Japanese yen on Thursday, 29 October 2026, as traders kept to the sidelines before a Bank of Japan policy decision the following day. According to FOREX.com, the pair has been moving sideways for some time inside a range between ¥156.50 and ¥159, leaving the market “very neutral” but clearly bounded.

For readers new to currency trading, USD/JPY is quoted as the number of yen needed to buy one US dollar, so a higher figure means a weaker yen. A range like ¥156.50 to ¥159 simply describes the floor and ceiling within which the pair has recently traded.

Contents

01

A Pair Stuck Between Two Central Banks

02

What Analysts Say to Watch

03

Levels in Focus if the Range Gives Way

A Pair Stuck Between Two Central Banks

The immediate trigger for caution is Friday's Bank of Japan meeting. The central bank raised rates by 25 basis points in September, bringing its tightening this year to 50 basis points, and is widely expected to leave its policy rate at 1.25% this time. Holding steady would give policymakers more time to judge how earlier increases have affected borrowing conditions and economic activity.

Because an unchanged decision is largely anticipated, attention is expected to move to the BoJ's revised growth and inflation projections and to Governor Kazuo Ueda's press conference. Traders expect a further increase in December, with higher energy prices and the weak yen's effect on import costs adding to inflationary pressure.

The inflation backdrop supports that view. Japanese prices excluding fresh food rose 2.1% year on year in the latest release, up from 1.7% previously and above the BoJ's 2% target. Stripping out both fresh food and energy, inflation accelerated from 1.9% to 2.4%. October Tokyo consumer price data and September unemployment figures were due before the policy decision and were expected to offer a further read on price pressures and labour market conditions.

On the other side of the pair, the Federal Reserve left rates unchanged at its Wednesday decision, but the latest US data left a December increase firmly on the table. Annual headline and core PCE inflation both rose, third-quarter GDP growth came in stronger than forecast, and jobless claims were below expectations, indicating that layoffs remained low. Personal income and spending undershot forecasts.

The dollar nonetheless struggled to hold its early gains after those releases. The US Dollar Index, which measures the greenback against a basket of six major currencies, touched an intraday peak of 102.33 before slipping back towards 102.00. The Australian dollar was the major currency against which the US dollar performed best.

What Analysts Say to Watch

Analysts at Commerzbank argue that guidance on the year-end outlook matters more than the immediate decisions at forthcoming BoJ meetings. “For FX markets, the more important question will therefore be what the BoJ signals about December,” they wrote, noting that markets currently price in an around 80% probability of a rate hike by then. That is in line with their own expectation that the BoJ will raise the policy rate to 1.5%. In their assessment, recent BoJ communication alongside the economic backdrop increasingly suggests the next step towards policy normalisation is approaching.

On the charts, FOREX.com notes that USD/JPY is hovering around the confluence of its 50-day and 200-day exponential moving averages, technical levels that can act as support or resistance. In the publication's view, a decisive break out of the ¥156.50 to ¥159 range would be a valuable clue to the pair's next direction.

The same analysis attributes the pair's hesitation to uncertainty over Japanese policy, while saying the market seems convinced the Fed will raise rates in December, widening the interest rate gap between the two currencies. It adds that Fed funds futures are beginning to price a possible March rate hike, though below a 50% probability, and that if that pricing persists the pair could eventually move higher.

Levels in Focus if the Range Gives Way

FOREX.com sets out a ladder of levels above the range. A break above ¥159 would, in its reading, open the way to ¥160. Beyond that, it points to a possible move towards ¥164, a level it says the Bank of Japan aggressively guarded at the end of July.

The publication also says the yen has “a lot of problems” structurally, while conceding that whether this plays out now or two years from now remains to be seen. It states a preference for buying dips in USD/JPY, citing the daily carry return and what it describes as the US dollar's continued resilience. Carry refers to the interest earned for holding the higher-yielding currency in a pair, which in this case is the dollar.

For regional readers, the yen's direction matters beyond Tokyo. A weaker yen raises import costs for Japanese goods and affects how Asian exporters price against Japanese competitors, while swings in USD/JPY often feed into broader dollar sentiment that regional currencies such as the Singapore dollar, Malaysian ringgit, Indonesian rupiah and Thai baht trade against. The next clear signal is likely to come from the BoJ's December guidance rather than Friday's widely anticipated hold.

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